While the people’s bank accounts are getting closer and closer to the negative, the banks go in the opposite direction. In the list of ten companies that made the most profit in the first quarter of this year, five are financial institutions. How can they achieve such thing? The answer is simple, with your money. When someone buys a house, for example, a mortgage broker gets a couple hundreds of dollars while the bank earns thousands either in revenue or in interest.
Those who apply $ 5,000 in savings, at the end of a year, have around $ 5,500 in balance. If, on the other hand, the accountant owes $ 5,000 in overdraft, the debt reaches almost $ 20.000 at the end of 12 months. This difference between what the bank charges when you borrow money and how much it pays when it has your money, the so-called banking spread, is the main source of wealth of these institutions. That is the same idea for mortgage lenders, as they make money the same way.
Understand more about mortgage brokers
If in the financial sector there is no crisis, in the real world when people have to deal with unemployment, loans, credit card at the limit and overdraft. And it is this financial mismanagement that makes the magic of money multiplication happen in the banks and for mortgage lenders, who happen to be banks most of the times. In some countries, such as in Brazil, banks have their loans backed by a standard called Selic, which is at 15% a year, they charge customers. Only on the credit card, the interest charged reaches almost 500% per year. More explained here: http://www.bankrate.com/finance/financial-literacy/finding-the-best-mortgage-lender-1.aspx
Another form of profitability is the collection of fees, on an upward trajectory. The rates and interest rates tend to get higher in times of crisis. Banks stop winning on a scale, because the loans fall. On the other hand, they have higher margins to cover the risk of losses. Even mortgage brokers Melbourne could help you understand that better.
Many banks all over the world presented the best performances among publicly traded companies in the world with billionaire profits wherever they are from. They still hold equity interest in some of the leading companies based not only in Australia, but all over the globe.
When you think of mortgage brokers Melbourne you should know that people who work with mortgages also make some profit, however not as big as when we are dealing with banks, for example. A mortgage broker can show you the way to save some big bucks when looking for a house or any sort of property. As these professionals are specialized in finding the best deals for people, they will definitely help clients save money. Of course these professionals earn commissions, but values way smaller than a bank ever would. So if you are looking for a mortgage or if you would like to know more about how everything works you can talk to them here.